Taiwan Electronics Manufacturers Need Better R&D, Logistics
Aug 19, 2003
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Taiwan electronics manufacturers operating in mainland China need to advance their research and development capabilities and logistics to maintain their advantages in that market, according a survey by the National Science Council.

The report says that the electronics industries on both sides of the Taiwan Strait are closely correlated, with 70 percent of the mainland electronics manufacturers doing business directly or indirectly with their Taiwanese counterparts.

While most Taiwanese electronics manufacturers decided to move their production lines to the mainland to cut down production costs and to have easier access to the market, in recent years, increasing numbers of Taiwanese investors have made the efficiency of local government and the living environment their major elements of consideration, the report said.

In terms of market strategies, most of the Taiwanese manufacturers on the mainland delivered their products as OEMs (original equipment manufacturers) and ODMs (other design and manufacturers) for international brand companies. The profit margins of the Taiwanese companies were squeezed whenever these international corporations engaged in a price war, according to the report.

The report also points out that the Taiwanese manufacturers should closely watch the market developments on the mainland, as the electronics industry there has gradually developed its own supply chain of parts and components.

For many years, the electronics manufacturers on the mainland, including Taiwanese investments, purchased the lion's share of parts and components from Taiwan for their assembly plants. With the establishment of its own supply chain, electronics manufacturers on the mainland have reduced their reliance on Taiwan, according to the report.

The report suggests that the electronics industry in Taiwan must advance its capabilities in research and development and maintain its advantages in logistic management.

While many Taiwanese electronics manufacturers have kept their operational headquarters in Taiwan after moving their production lines to the mainland, logistic expertise, including inventory management and other backups, remain an advantage for Taiwan's electronics industry, the report said.

In order to maintain their international competitiveness, the report says that Taiwan electronics manufacturers must advance their capabilities in global logistics. (CAN, Asia Pulse)

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